Aofu Environmental Technology Co.Ltd(688021) (688021)
Carrier is the key component of the exhaust after treatment system of internal combustion engine. Honeycomb ceramic carrier has the properties of large specific surface area and low thermal inertia. It is used to coat catalyst or capture particles. According to the exhaust gas flow mode, the honeycomb ceramic carrier can be divided into straight through type and wall flow type. The straight through type is the catalyst carrier, and the inner wall of the hole provides the reaction area. When the exhaust gas passes through the hole, it fully reacts with the catalyst to convert NOx, HC and CO into harmless substances; The two ends of the wall flow carrier channel are blocked alternately, many micropores are evenly distributed on the side wall of the channel, and the tail gas is forced to pass through the micropores on the side wall of the channel to filter out soot particles. The physical structure and performance of honeycomb ceramic support ensure that the catalyst can effectively treat tail gas under various working conditions.
Due to high technical barriers, the price system is stable and the competition pattern is orderly. The reaction environment of the tail gas post-treatment system is complex. The honeycomb ceramic carrier needs to meet the technical specifications such as low thermal expansion coefficient, thin wall and porous mesh. There are high technical barriers in the production links such as raw material synthesis, material ratio, mold manufacturing and firing process, which is difficult to be imitated by reverse engineering. Corning invented the honeycomb ceramic carrier and applied it in the field of automobile exhaust purification in the 1970s. Later, it authorized NGK technology. They jointly monopolized the market and mastered the pricing power. At present, they still occupy 90% of the global market share. In recent years, Chinese enterprises have made technological breakthroughs. At present, the company has the whole process technology and production experience, and has a competitive advantage in the field of heavy diesel vehicles, with a gross profit margin of about 55%.
The volume and price of the national six standard download market have risen simultaneously, and domestic substitution opportunities have emerged. The upgrading of tail gas treatment technology route and the improvement of pollutant emission standards promote each other. Since July 1, 2021, heavy-duty diesel vehicles have fully implemented the “national sixth” standard. The tail gas post-treatment technology route has been upgraded from adding SCR carrier to doc + DPF + SCR carrier. The displacement ratio per liter is 2 liters of SCR, 0.7 liters of DOC and 1.5 liters of DPF, and the amount of carrier has doubled; In terms of price, the technical specifications of various carriers are improved, making it more difficult to manufacture, so the price is increased. In addition, the price of DPF carrier is nearly twice that of SCR carrier. The value of single vehicle carriers has increased, the main engine manufacturers are more sensitive to prices, superimposed supply chain security considerations, and the domestic substitution process has accelerated.
The company has sufficient technical reserves and is expected to achieve rapid growth and share improvement. Since its establishment in 2009, the company has focused on the cause of honeycomb ceramics. In 2013, SCR carrier was officially put into operation. At present, the company has advanced technology and practical experience in the whole process from raw material synthesis, material formula, mold manufacturing and firing process, and has a competitive advantage in the field of heavy diesel vehicles. The catalyst coating is directly downstream of the carrier. Both of them are suppliers of the main engine plant or the vehicle plant. They need to be matched with other parts for environmental protection type inspection. Once announced, they will form a relatively stable supporting relationship with the main engine plant or the vehicle plant. At present, they have successfully entered Sinotruk Jinan Truck Co.Ltd(000951) , Weichai Power Co.Ltd(000338) , Yuchai power, Kunming Yunnei Power Co.Ltd(000903) , Cummins, Anhui Quanchai Engine Co.Ltd(600218) , Henghe Daimler and other suppliers. With the release of production capacity, the rate of good products climbing and entering the list of suppliers of more main engine manufacturers, the company is expected to expand its share and increase its gross profit margin.
Profit forecast and investment rating: we expect the company to realize net profit attributable to parent company of 108 million yuan, 210 million yuan and 318 million yuan in 21-23 years, with a year-on-year increase of + 34%, + 96% and + 51% respectively. The net profit attributable to the parent company in 21-23 years 2y-cagr is 72%, and the current stock price corresponds to pe18.5% in 22 years 7x, corresponding to peg0 26。 Due to high technical barriers and good competition pattern, the promotion of national six standards has brought about 1) demand growth and market expansion; 2) The value of single vehicle carriers has increased, the main engine manufacturers are more sensitive to prices, superimposed supply chain security considerations, and the domestic substitution process has accelerated. The company has the technology and experience in the whole process of raw material synthesis, material proportioning, mold manufacturing and firing process, and has obvious competitive advantages in the field of heavy diesel. At present, it has fully contacted the main engine plant, and entered the supplier list of more main engine plants with the release of production capacity, the rate of good products and the increase of gross profit margin. It is expected to achieve share expansion and increase the “buy” rating.
Risk factors: the improvement progress of yield rate is less than expected, capacity expansion is less than expected, customer expansion is less than expected, etc
